Monday, November 3, 2014

The IMF, Austerity and the Ebola Crisis in West Africa

Recently I posted (and here) on the relative persistence of IMF policies on the fiscal front. As noted by Rick Rowden, the IMF has, at least temproraily, lifted its ban on fiscal expansion in West Africa, as a result of the ebola crisis. Christine Lagarde, the Fund's Managing Director said:

"It is very rare for the IMF to say that, but on this occasion I will say it: It is good to increase the fiscal deficit when it's a matter of curing the people, of taking the precautions to actually try to contain the disease. The IMF doesn't say that very often."

No they don't. Rick explains in his Foreign Policy piece how the IMF has an impact on heath outcomes with its austerity policies. He says:

"the harmful effects of IMF policies on health systems are not direct; it's not as if the IMF comes in and directly tells a country to spend less on public health. Instead it's a two-step process: First the IMF policy targets constrain overall national spending levels, and this then limits the spending available for long-term public investment, including for the health infrastructure. Consequently, chronic and sustained underinvestment in public health infrastructure has become the norm in many countries, year after year, over the last few decades."

And yes, Rick knows that the IMF has not caused the ebola crisis with its austerity policies, it has just made them worse. He concludes that:

"But if the international community is serious about addressing chronic under-investment in the public health systems in these countries, it will also have to revise the obvious shortcomings of IMF fiscal and monetary policies."

I had written on the IMF and the use of aid for health spending in relation to the HIV/AIDS crisis in Africa. The paper was published by the United Nations Development Program's Poverty Center and is available here.